The trade war that President Trump started with China to protect domestic companies is starting to bite steelmakers.
The producers are reeling from a manufacturing slump that has hurt its customers’ ability to take on higher prices. A key U.S.unexpectedly contracted in August for the first time since 2016, adding to evidence of global manufacturing woes, and on Thursday the international Organization for Economic Cooperation and Development lowered its global growth forecast as protectionist policies take an increasing toll on confidence and investment.
Adding to the travails is that steelmakers boosted production plans in the wake of the tariffs, which put self-inflicted pressure on prices. Ebbing demand from industrial customers and prospects for increased output are upending the optimistic outlook conveyed by the top executives of steel companies as recently as midyear. In July, John Ferriola, the chief executive of Charlotte, N.C.-based Nucor, declared that steel prices had hit bottom, citing strong demand in key end-use markets.
“We know that there are concerns about a recession in the U.S.,” said Frederick of Charles Schwab. “A lot of it has to do with the trade concerns in China and a general slowdown overall in manufacturing.”The impact of the trade war on the U.S. economy hasn’t escaped the notice of Federal Reserve policymakers.
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